Understanding the supply chain blues

If the saying goes, 'May you live in interesting times', then no one is going to argue that we’ve not all been delivered very 'interesting times' over the past 12 months. One of the sectors most heavily and negatively impacted has been supply chain. It’s why it's no surprise to see customers in our IDC survey describe supply chain as one of the greatest challenges facing their business right now.

At virtually every touchpoint, the supply chain is massively disrupted. Locally and internationally, the knock-on effect of the last year has triggered a near-collapse at every point.

There’s evidence — anecdotal and otherwise — that supports this. Workers have been told to pack up and go home because there are no containers to put their product in, while businesses have booked containers and had their slots on departed ships confirmed, only to then find out the container was left sitting on the dock.

People ask me, is it really that bad? It’s huge. It's all about oscillations.

When the first waves of the pandemic hit, you saw massive stock shortages. Then it became apparent there was an oversupply issue in some areas, such as PPE (personal protective equipment) gear. Now, we’ve come full circle and there’s a real shortage again, right across the board. For example, it’s almost impossible to buy a new car in New Zealand and it's very difficult to get wood, globally, for domestic or commercial builds. There's also a chronic shortage of semi-conductors so if your business is trying to supply laptops to staff suddenly working from home, or if your business is trying to build anything with memory, you cannot get chips for those products. It’s a perfect storm.

Businesses need to get agile and information integration is key to digital agility. We all have to look past the panic, look forward far enough ahead, and acknowledge that we need greater visibility and better systems. Businesses need better communications with international partners.

Information integration means asking questions like how do we scope what’s required to get the data in from a range of different carriers, how do we do that in real time, and what can we do if they all use different standards and processes? If those disparate processes can be aligned, then a business has some visibility over what’s coming from where and when. With data that can be tracked and invoiced against, the ability to forecast well becomes possible.

It’s not so much trying to control the uncontrollable as having visibility of the uncontrollable in the first instance. It's about making better decisions than you’re able to make at the moment.

Ultimately, it’s about getting people to talk together. Everyone says they need a solution — that’s what the IDC survey bore out — but you need to encourage people to share information.

Making these sorts of changes can deliver clarity where currently there is virtually none. It’s about mapping out a clear direction for a business to take and one that’s going to get it to the best current outcome. This whole thing could take two to three years to fix, so we have to focus on what we can do right now.

There’s a lot of talk about artificial intelligence (AI) and it’s very much part of a digital agility solution. It’s a brilliant cure to the supply chain blues, because of the way it can recognise patterns. When you’re trying to extract order from chaos, which is pretty much the situation we’re in at the moment, that is a very key advantage.

Humans are pretty good at recognising patterns, but we don’t recognise particularly complex patterns very well. Put AI into the process and it will recognise complex patterns, earlier, and with more certainty of the outcome. So, you can start raising alerts, and again, assert some control over that which previously seemed completely out of control.

We’re now getting to the point where we can ask: what are the things we need to change systemically? Over the long term, what is the thing we need to improve? And how do we help businesses recover well?

Datacom has a better reach across the supply chain than any other technology provider in New Zealand, so we are positioned well to understand and deliver against the problem. We can use information integration, enhanced digital capability, and digital agility as a way out of the supply chain blues.

With over 30 years of experience, supply chain expert, Dave Ffowcs Williams, works with businesses across New Zealand to help them get on the road to a more efficient, traceable, and responsive supply chain.